BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 302 (Lara) - Claims against the state: appropriation
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|Version: April 20, 2015 |Policy Vote: |
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|Urgency: Yes |Mandate: No |
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|Hearing Date: May 4, 2015 |Consultant: Mark McKenzie |
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This bill does not meet the criteria for referral to the
Suspense File. Pursuant to the committee's rules, the Suspense
File rule does not apply to the provisions of this bill as
judgments and settlement are considered valid obligations of the
state. Additionally, judgments and settlements may have time
sensitivity.
Bill
Summary: SB 302, an urgency measure would appropriate
$25,140,683.50 from the General Fund, and $141,250 from the
Athletic Commission Fund, to specified departments for the
payment of five settlements. Any funds appropriated in excess
of the amounts required for payment of these claims shall revert
to the respective funds.
Fiscal
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Impact:
One-time appropriation of $24 million in 2015-16 from the
General Fund to the Department of General Services (DGS) to
pay the settlement in California First, LP v. California
Department of General Services, et al.
One-time appropriation of $106,173,50 in 2015-16 from the
General Fund to the Fair Political Practices Commission (FPPC)
to pay the settlement in Charles R. "Chuck" Reed, et al. v.
Fair Political Practices Commission.
One-time appropriation of $1,034,510 in 2015-16 from the
General Fund to the Department of Justice (DOJ) to pay the
settlement in Kevin Marilley, et al. v. California Department
of Fish and Game.
One-time appropriation of $71,250 in 2015-16 from the Athletic
Commission Fund to the Department of Consumer Affairs (DCA) to
pay the settlement in Sarah Waklee v. California State
Athletic Commission, Department of Consumer Affairs.
One-time appropriation of $70,000 in 2015-16 from the Athletic
Commission Fund to the Department of Consumer Affairs (DCA) to
pay the settlement in Dwayne Woodward v. California State
Athletic Commission, Department of Consumer Affairs.
Background: This bill is one of several annual bills carried by the chairs
of the Appropriations Committees to provide appropriation
authority for legal settlements approved by DOJ and the
Department of Finance (DOF). These settlements were entered into
lawfully by the state upon advice of counsel (DOJ). They are
binding state obligations.
Proposed Law:
This bill would appropriate special fund and General Fund
revenues to DOJ and specified state entities to pay the
following settlements:
California First, LP v. California Department of General
Services, et al.
(San Francisco County Superior Court, Case No. CGC10-505436)
$24 million settlement, payable from the General Fund.
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In this lawsuit, the prospective buyers of 11 state-owned
properties filed a complaint against DGS and its Director on
March 10, 2011. The plaintiffs had won a bid to purchase the
state properties for $2.3 billion, and sued to compel the state
to proceed with the sale or pay monetary damages and other
relief totaling $1 billion. DGS filed a cross-complaint
alleging that the parties' contract had terminated and that the
state could therefore not be compelled to complete the sale.
The trial commenced in November of 2014 after several failed
motions by the state to dismiss the case or reduce the claim
amounts, and the parties entered into voluntary mediation. A
settlement was reached on February 19, 2015 after lengthy
negotiations. Under the terms of the settlement, DGS will make
a lump-sum payment of $24 million to California First, and all
claims by both parties will be released.
Charles R. "Chuck" Reed, et al. v. Fair Political Practices
Commission.
(Sacramento Superior Court, Case No. 34-2013-80001709)
$106,173.50 settlement, payable from the General Fund.
In late 2013, San Jose Police Offers' Association President Jim
Unland filed a case against San Jose Mayor Chuck Reed and his
pension reform committee before the FPPC, arguing that Reed had
violated state law when he redirected $100,000 from his PAC to
an independent expenditure group that supported the 2012
reelection campaign of City Councilmember Rose Herrera.
Existing law, Gov. Code 85501, prohibits candidate controlled
committees from funding independent expenditures in support of
or opposition to other candidates. FPPC determined that Reed
had violated that law, but concluded that he had done so
unintentionally because he was not up for reelection and did not
consider himself to be a candidate, and imposed a $1.00 fine
(FPPC No. 12/761).
On December 13, 2013, Reed filed a petition with the Superior
Court to appeal the fine, and challenge the decision, alleging
that Section 85501 is facially unconstitutional because it
suppresses campaign contribution speech. In March 2014, the
court ruled that Reed was a "candidate" under the Political
Reform Act, but that Section 85501 is unconstitutional on its
face in that it violates public officials' First Amendment
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rights to free speech and engagement in the political process.
As a result of this judgment, Reed demanded that FPPC pay his
attorneys' fees and costs pursuant to the Civil Code of
Procedure. Following settlement negotiations with FPPC's
counsel, an agreement was reached where Reed agreed to accept a
reduced balance of fees amounting to $106,173.50. FPPC approved
the settlement in July 2014.
Kevin Marilley, et al. v. California Department of Fish and
Game.
(United States District Court, Northern District of California,
Case No.11-cv-2418)
$1,034,510 settlement, half payable from the General Fund, half
payable from the Dungeness Crab Account within the Fish and Game
Preservation Fund.
This case involved a group of commercial fishermen who were not
California residents but fished in California waters. One of
these fishermen, Kevin Marilley, filed a class action suit in
the United States District Court in May of 2011 against the
Director of the California Department of Fish and Game (later
appeals were filed against the Director of the Department of
Fish and Wildlife), alleging that California's fishing license
statutes, which charge nonresident fishermen two to three times
more than the fees assessed on resident competitors, are
unconstitutional. The fishermen and the state filed
cross-motions for summary judgment.
The US District Court granted summary judgment in favor of the
plaintiffs, finding that the differential fees violate the
Privileges and Immunities Clause of Article IV of the US
Constitution, and concluding that the state failed to
demonstrate a substantial state interest. On December 10, 2013,
the plaintiffs moved for an award of attorney's fees and court
costs. After negotiations, and upon recommendation from the
Department of Justice, the Department of Fish and Wildlife
accepted the proposed settlement of fees accrued by the
plaintiffs though April 18, 2014, in the amount of $1,034,570.
The state has filed an appeal in the Ninth Circuit Court of
Appeals and the payment of these fees and costs are stayed until
that appeal is resolved. However, in the event that the
decision is upheld, prompt payment will be required. The
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Department of Finance approved an appropriation of the
settlement amount to be split between the General Fund and the
Dungeness Crab Account within the Fish and Game Preservation
Fund.
Sarah Waklee v. California State Athletic Commission, Department
of Consumer Affairs.
(Sacramento County Superior Court, Case No. 2012-00135227)
$71,250 settlement, payable from the Athletic Commission Fund.
This lawsuit resulted from an employment dispute. The complaint
was filed by an employee of the State Athletic Commission, Sarah
Waklee, who worked for the Commission since 2004, becoming Lead
Athletic Inspector in 2007. Ms. Waklee filed suit in the
Sacramento Superior Court on November 5, 2012 against the
Department of Consumer Affairs and several other employees of
the Commission, alleging preferential treatment, harassment, and
gender discrimination.
In late 2014, following depositions and upon calculating current
and prospective litigation costs, the DCA, in consultation with
the Attorney General's office, negotiated and accepted a
settlement agreement with Waklee. The settlement offer included
a dismissal of the suit with prejudice; Waklee's resignation
from the Commission; and a payment to Waklee in the amount of
$95,000.00 on or before June 30, 2015. DCA was able to absorb
$23,750 within its existing spending authority. The
appropriation in this bill will pay the remaining $71,250 from
the Athletic Commission Fund.
Dwayne Woodward v. California State Athletic Commission,
Department of Consumer Affairs
(Los Angeles County Superior Court, Case No.BC487180)
$70,000 settlement, payable from the Athletic Commission Fund.
This lawsuit also resulted from an employment dispute. The
complaint was filed by an employee of the State Athletic
Commission, Dwayne Woodward, a thirty-year employee who worked
for the Commission as an inspector. Mr. Woodward filed suit in
the Los Angeles Superior Court in August of 2012 against DCA and
the Commission, alleging, among other things, age
discrimination, retaliation, and harassment in violation of the
Fair Employment and Housing Act.
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Woodward sought a total of $1.9 million in damages, including
$750,000 for age discrimination, $750,000 for retaliation,
$164,954.24 for lost earnings, $100,000 for attorney fees, and
$123,715.68 for three years of future earnings. After several
good-faith negotiations, the parties concluded that it would be
in their best interests to settle their disputes to avoid the
expense, inconvenience, and uncertainty of a trial. The January
15, 2015 settlement calls for dismissal of the suit with
prejudice, and a payment from DCA to the plaintiff in the amount
of $70,000 (with $35,000 due by June 30, 2015, ad $35,000 due by
July 15, 2015). This claim is to be paid through an
appropriation from the Athletic Commission Fund.
Related
Legislation:
AB 1615 (Gatto), Chap142/2014, appropriated $2.86 million to
DOJ for the payment of two settlements.
AB 234 (Gatto), Chap 449/2013, appropriated $20.7 million to
DOJ for the payment of two settlements.
SB 371 (De Leon), Chap 9/2013, appropriated $15.6 million to
DOJ for the payment of two settlements.
Proposed Author
Amendments: The author proposes to amend the bill to delete the
Marilley claim, and make several technical and conforming
changes. Specifically, the amendments would:
1. Strike out lines 37-40 on page 2, and lines 1-3 on page
3.
2. Strike out lines 20-21 on page 2, and insert:
(b) Twenty-four million one hundred six thousand
one hundred seventy three dollars and fifty cents
($24,106,173.50) is hereby
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3. On page 2, line 14, after "($70,000)" insert:
to the Department of Consumer Affairs
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